Lean Six Sigma

How (and why) to easily calculate your overall equipment efficiency

Continually monitor your OEE by updating a few numbers.

By Glyn Thorman, Houston Consulting Group

Overall equipment efficiency (OEE) has long been understood as a key metric to measure not only how well a site is performing, but also how changes made at a plant may be having a desired effect. Much like a football scoreboard though, OEE only reports on the present performance. It cannot move the ball, intercept a pass, or score a touchdown. But it can simply and accurately present a documented picture of equipment and plant efficiency.

The numbers contained in an OEE score can be used to compare similar equipment, sister plants, or even entire industries. When you know your numbers, you know your opportunities.

This article is meant to assist the reader in understanding the components of OEE, why you need to know these measurements, and also how to calculate the measurement readily at your own site.

You also can access a free-to-use OEE spreadsheet by clicking bit.ly/HCGOEE. The template requires a few numbers updated to continually monitor your OEE performance.

The elements of OEE

Let’s start with your car as an example. A perfect car could run all day, at maximum factory speed of say, 100 mph, and never have to stop. It doesn’t get lost or take a wrong road. During the day, the car has no time-losses from maintenance and needs no extra fuel. Because it is constantly running, there is no loss of availability. The rate is consistent, with no rate reductions caused by slowing for corners or traffic lights. And, the car never gets lost or is forced to redo a portion of the trip to get back on the right road. It’s 100% efficient – the perfect car.

OEE is a metric that estimates the ability of a machine or other plant asset to be always up and available, running at nameplate capacity and producing no off-spec material. Factors such as scheduled or unscheduled maintenance, rate reductions, and start-up quality issues can have a negative impact on the desired potential. This is where OEE shines: it tells you where to look for improvement opportunities, what your goals could/should be and how you stack up against the competition – internal or external. With this information you can focus on where to implement maintenance improvements, reduce bottlenecks, make schedule adjustments, or even modify your perceived required scheduled downtime.

In short, similar to the football scoreboard, OEE tells you how you’re doing – it captures all your improvement opportunities that have a major impact on your financial well-being. And if improvements don’t show up on OEE, then maybe the improvements are having minimal impact on your overall plant revenue.

The three primary components to OEE are Availability, Rate, Quality, and each is worth a closer look. Plus, we’ll take a look at the controversial Idle Time subject.

Availability

Availability can be defined as the degree (percentage) to which a unit or machine is continually operating during a prescribed time. Unscheduled downtime such as corrective maintenance, or scheduled downtime events such as grade changes or preventive maintenance, are detractors from Availability. Unscheduled events are considered avoidable, but why are scheduled events considered unavoidable? The answer is, does everyone in your industry perform these scheduled actions and to the same degree?

When you discount an action, you lose the opportunity to improve it. For the example in this article, Potential Run Time is calculated as Total Available Time less Idle Time. This is the potential time available with no discounts for scheduled or unscheduled events. Anything less is lost Availability.

But why is there a penalty for scheduled events? Good question, if your customers excuse you for any of those events and willingly pay a higher cost. Or, if your competitors say they appreciate your difficulty and won’t steal your business. Whenever you excuse lost Availability other than for Idle Time, you’re taking an opportunity for improvement off the table. I believe Actual Run Time should pursue Potential Run Time as a goal.

Idle time and availability?

This component can be controversial. Some plants consider all or part of Idle Time as a negative for Availability. For example, economic demand, lack of feedstock, or administrative decisions that do not require the machine to be in production are cited as reasons for negative Idle Time. But the point must be raised – if the machine is in a not needed condition, why penalize Availability? Rather, Idle Time should correctly be discounted from Potential Run Time and from Net Maximum Production, and not negatively impact OEE calculations.

However, I recommend you track and strive to improve the amount of time a machine is idled by following the calculator results shown in the spreadsheet in Figure 1. Idle Time percentage is a beneficial metric for tracking/reducing underused equipment, but in my opinion, is not part of the OEE metric.

Rate

In easy terms, Gross Maximum Production is how fast the machine was designed to run, or how fast it has run in the past via upgrades. This is often referenced as maximum proven rate or more simply, nameplate or best demonstrated rate. It is the level of the bar for how machines could/should run. Ask old hands on-site about how a piece of equipment used to run when new. You may be amazed at how a machine has gradually slowed down over the years.

Rate is the most field-observed abuse of the three components of OEE. Slowing down machines often reduces personal stress, makes the equipment run "easier" and makes the availability numbers better. But, Rate is often the largest OEE detractor and sometimes offers the greatest potential for a quick OEE improvement.

Note: When Rate surpasses 100% Rate and continues for more than a few days, you now have a new Gross Maximum Production number and you change your base.

Quality

Quality is determined based on "first-pass". In most instances, recycling material to obtain necessary quality is not considered first-pass. Although it may be prudent to re-run or blend off-spec material to salvage the value, it is not considered first-pass quality for OEE calculations. During start up periods or when switching product lines, quality issues may seem inevitable; however,  as mentioned before, allowing for discounts or other exceptions only removes an improvement opportunity.

The spreadsheet calculator

OEE may seem a complicated calculation, and in some cases it is. To ease the task, we suggest three strategies:

  1. Keep the measurement and definitions as simple as possible.
  2. Don’t start discounting for events or conditions you feel are uncontrollable.
  3. The more auto-populating your calculation is, the easier it is to maintain a consistent stream of input for your OEE numbers.

Figure 1 shows a daily calculator that uses three base numbers entered once (in gray shading), and eight numbers that are updated daily (in blue shading). The three base numbers are typically continuous but can be adjusted if necessary. Although the sample captures Idle Time such as seen in discrete manufacturing or batch operations, a continuous process operation would often place in zero in the Idle Time cell.

In our example, the Total Available Time is a single 10-hour period, one shift per day and equal to 600 minutes.  Based on these eleven numerical inputs, all other cells, including the OEE result cells and the Idle Time percentage cell, are automatically calculated. For added value, the spreadsheet can readily be modified for weekly, monthly, etc. OEE calculations and reports.

One of the key aspects the calculator prevents is to not double-punish – only one OEE category is impacted by any given issue, and all three are equally weighted in the final OEE calculation.  (For example, a stopped machine impacting Availability from a mechanical failure does not also trigger an OEE loss for the Rate.)

Rate is determined by how fast you ran, for the time you actually ran. Quality is based on how much you lost from 100% Quality during the period you actually ran. Be aware, you will note that the higher your Availability time increases, the higher the bar will be for the Rate calculation. If you improve Availability and don’t improve the Rate, your Rate percentage will go down an equal amount!

To begin your calculation:

  • Enter the Total Available Time in minutes. Our sample is 10 events, each being one hour. The calculator will multiply the event times the length of the event in minutes (60) to derive Total Available Time per shift, or 600 minutes. (If you are tracking by the week or longer, you can use hours.)
  • Enter the Idle Time variable for when the machine was not needed. (This may be 0.)
  • For other variables, enter the Scheduled Downtime and the duration in minutes, and do the same for Unscheduled Downtime.
  • Enter Gross Maximum Production data, based on nameplate value or demonstrated machine/unit capacity. This does not discount for Idle Time. It is the total length of time and what the production could be at 0% Idle Time. (Net Maximum Production will automatically adjust for Idle Time.)
  • Enter Actual Production and Off-Spec Production data.

Note: If your site has multiple shifts then it is suggested you track OEE by each shift, as variations in OEE can sometimes be more related to people than to the equipment.

The 3 gray background cells in our template reflect the relatively consistent, or base, measurements. The blue backgrounds represent the variables you will update each period. The data in yellow is the resulting OEE based on the consistent measurements and the variable measurements. All three core measurements roll into the final OEE calculation.

Summary

Overall Equipment Efficiency is a critical calculation that will not only identify where you currently stand but also where you should be. Most importantly, it pinpoints which of the three OEE measurements are the leading laggards.

The Idle Time measurement is discounted from OEE in our calculator but is an important indicator of how well the machine is being asked to be available and utilized.  Excessive Idle Time is a limiter to overall OEE performance gains.

The calculator also is based on a purist view. The measurements can do more than just deliver the greatest array of change option opportunities.  Most of them will affect your bottom line and your plant’s competitive viability.

In the OEE example, all three of the indicia points have opportunities to improve; however, Availability is the first target for immediate improvement. The availability number has been significantly impacted by downtime events (scheduled and unscheduled). Why? These are questions management will have to focus on. And that’s the purpose of OEE: to find out where the opportunities lie. You can only get better if you know where you are.

To learn more, read "9 FAQs on OEE."